Small and medium-sized businesses don’t have the power of a big firm or the agility of a digital start-up but they can’t afford to miss the revolution. Baker Tilly’s experts explore data-driven solutions for this critical sector of the economy in our digital transformation series.
As the theatre of battle evolves in the digital revolution, many proven small and medium-sized businesses have found themselves caught in uncomfortable territory.
Pressure is being applied from the flanks – big business has the firepower to drive large data-driven transformations, while new start-ups have the digital agility to inflict damage on competitors.
It’s a dangerous place for established SMBs because the path to digital transformation is not as well defined – yet disaster looms if they choose to do nothing.
SMBs make up over 90 per cent of businesses in most countries, they are responsible for as much as two-thirds of employment, and contribute more than 50 per cent of GDP, with some estimates placing it as high as 70 per cent.
In short, SMBs don’t just contribute to the economy – they are the economy.
For these organisations, says Adam Grainger, Chief Information Officer at Baker Tilly International, the digital transformation should be about becoming adaptable and flexible in the face of ever-changing external factors.
“There’s little doubt that small and medium-sized businesses play a critical role in driving innovation and competition in their markets,” Mr Grainger says.
“But they don’t have the investment power or the productivity of a big organisation, or the agility of a digitally-focused start-up.
“The issue then is that established small and medium-sized businesses can look complacent and less innovative than the competition.
“Companies that display these traits are actually more likely to be locked-in, under-funded and ultimately extremely vulnerable to a pressured market.”
Mr Grainger cited some of common scenarios that business leaders hide behind are masking well-known deficiencies.
“Many times, we’ve heard companies say they have no need for a new website or CRM, for example, because that’s not how they win new clients or retain clients,” he says.
“Another is that they already have a good local market share and don’t feel the need to alter a winning formula, or they have retained the services of key employees for years.
“But companies that run with these excuses are often denying the reality of their vulnerabilities.
“It is likely the company that claims they don’t need to invest in technology has no idea about potential clients and employees being turned off by a poor experience.
“Firms referring to good local market share often know they are at risk from competitors outside that local market.
“The experience from long-serving employees can be a key strength for a company but it’s also a direct threat to renewal, to see the future possibilities.
“Personal integrity gets mixed up with company strategy in organisations with long-serving personnel and the influx of new ideas is halted, and suddenly there is no awareness about better ways of doing work or winning work.”
Digital transformation is not as simple as replacing a replaceable part on the assembly line of the business of the future.
But it also doesn’t have to be complex or require expensive digital solutions.
Identifying potential vulnerabilities is the first step for small and medium-sized businesses, because that understanding is the key to empowering change.
Baker Tilly’s Amanda Klein says when considering a digital transformation, organisations should analyse five key categories that are critical to success:
- Vision and strategy: What is the vision of the company and its desired future state?
- Data: How will I manage the collection, use, storage, transformation, processing and availability of data?
- Technology: What technology should I use to drive insights?
- People: What are the people needs of the organisation to support digital transformation?
- Process automation and governance: What are the rules that govern the use and distribution of data and processes?
Digital transformation can help businesses to improve their product or service offering, while also building a more meaningful relationship with a new generation of customers.
Tools are constantly being developed to aid SMBs with fast and flexible solutions. Mr Grainger nominated business intelligence, robotic process automation and low code application platforms as among those that should be considered in a digital rethink.
Business intelligence (BI)
The power of data is at the heart of the digital revolution and it’s the rise of the data-driven organisation that is dominating boardroom discussions.
Business intelligence solutions cover everything from descriptive and predictive analytics to data mining and data visualisation.
BI gives business leaders insights on trends and products backed by hard facts. The more data that is pooled, the deeper the understanding of elements of the business that can be drawn, allowing leaders to adapt to changing markets with confidence.
“Business intelligence governs the company strategy and it’s integral to understanding the business,” Rob McKie, Partner with Baker Tilly network firm Pitcher Partners in Melbourne says.
“If you do not know the cost base of your product, for example, how do you know how to price it?
“Without knowing the volume of sales for any given component, how can you decided what to sell?
“BI is a must for aggregating data from multiple key accounts and sub-vendors, and the information that is gathered by apps, RPAs or LCAPs should be fed into business intelligence.
“As a means to presenting knowledge, a clear and simple BI set-up is a winning formula.”
Robotic Process Automation (RPA)
If you’ve ever come across a repetitive task that was so simple it could be done by anyone, there’s good news. Increasingly, those tasks can be completed by a software bot.
Data processes that require high volumes of repetitive work may be ideal candidates for automation, which usually allows staff to be redeployed into more meaningful tasks.
Deepak Upadhyaya, Partner and Digital Technology and Risk Advisory lead for Baker Tilly WM in Canada says the application of RPA within small and medium-sized businesses has been underestimated as a tool to reduce risk and effort as well as incentivises the digitalisation of input.
“While RPA is just a tool, and not a transformative project on its own, it’s an enabling device in the transformation process that’s worth its weight in gold.”
Baker Tilly teamed up with a healthcare business to find an RPA solution to problems that had arisen between itself and a sub-vendor that adjusted prices frequently.
“The sub-vendor, the larger of the two companies, was not accommodating to the administration standards set by the SMB, and the SMB was not resourced to adjust prices frequently, which eroded their profit markup,” Mr Upadhyaya says.
“To ensure that its prices mapped the fluctuating prices of the sub-vendor, the company opted to replace its largely manual and infrequent pricing model with an RPA script that allowed them to respond immediately to price adjustments.
Low code application platforms (LCAP)
There’s an app for that, as the saying goes. But when there isn’t an app, businesses are turning to low code application platforms to fill the gap.
Processes that can’t be solved using off the shelf software solutions once required custom-built products, but an LCAP potentially offers a simpler solution.
Business users who identify an opportunity to optimise a process through an app can create one using simple platforms that require little or no coding knowledge.
Lasse Rindom, Chief Digital Officer at Baker Tilly in Denmark says LCAPs are able to give anyone with a smartphone access to apps for gathering digital data for key processes.
“In addition, the script also inserted information on these fluctuations in a data warehouse so that management and the sales teams could see trends, as well as aggregated price changes for specific products and wares when providing quotes on projects.”
“LCAPs can merge anyone seamlessly into a business’s digital eco-system and the low-code aspect means it is quick to deploy and customise.
“Research shows that the increasing need for real time computing of applications is a major factor fuelling the growth of the enterprise software market.”
Baker Tilly has developed multiple low code solutions for different clients, with low hanging fruits often touching upon compliance checklists, data capture or warehouse controlling and restocking.
“A lot of our clients are sub-vendors to larger companies that operate with high levels of compliance in sectors such as food production,” Mr Rindom says.
“This means that they must be able to provide adequate proof of correct processing at all time, and that his proof must be secured.
“Low code applications based on cloud infrastructure ensures traceability, reduces errors from manual input with a pen and removes the issue of displacement.
“For compliance processes, being able to produce quick and agile low code apps is a game changer.
“In restocking warehouses, having an app instead of a physical ordering paper increases efficiency in many areas, as orders for restocking are born digital and carried digitally all the way past sub-vendors and into accounting.
“Born digital is important – if your data originates from a digital source, like a low code app, it is possible to attach multiple other tools to it, such as RPA or business intelligence.”
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